In the age of email, delivering the paper variety is bound to be a tough line of work. But what has really done for Royal Mail is years of being run according to the rule book of ultra-capitalism. Sharp-elbowed businessmen have been brought in to engage in sterile standoffs with defensive union leaders. There has been under-investment, in both sorting offices and the pension fund. Even more ruinous was the move to expose the service to competition while denying it room to respond to the challenge. The universal service still stands, but the regulator's obsession has been clipping the wings of the one operator that takes letters from Bideford to Bonar Bridge.

The backdrop for the Royal Mail rescue plan, which Lord Mandelson introduced yesterday, is an abject failure to defend the ideals of a cherished public service. While we await the small print, the business secretary says he will follow the three-prong strategy of the recent Hooper report. The first two elements - intervention to shore up the pension fund and recasting of the failed regulatory system - are restorative steps. Yet the third step, the sale of a substantial stake in the Mail, shows the neoliberal presumption that public enterprise is always doomed has not lost its stranglehold on New Labour thinking.

The message Lord Mandelson wants to get across to Labour backbenchers is that his parcel of policies cannot be unwrapped and considered in isolation. No stranger to the art of spin, he released a letter from the chair of the pension trustees, Jane Newell, which stated that the Hooper reforms were necessary to ensuring that the money needed to pay postal workers' pensions would be there as these fell due. Ms Newell is a woman who takes her fiduciary duty to Royal Mail pensioners seriously, and she is right to say that change is needed to restore the fund to health. Her letter, though, did not get into which of the trio of Hooper recommendations was so essential. Taxpayer underpinning of the fund is the crucial thing from her point of view. An injection of capital is also important, although in principle this could come from public funds, as opposed to private sale.

The trade unionists who write to the Guardian today are understandably worried that privatisation will punish a low-paid workforce. The interests of postal workers and letter writers are not identical, but the 132 Labour MPs now opposing the sale are right to suspect a partly private service will soon look for ways to wriggle free of its costlier duties. In the parliamentary vote, ministers may see off the rebels with the help of Conservative votes, just as they did over Iraq. But unless Lord Mandelson springs surprises today, the rebels will prevail in the argument.